Lecture 08

Insurance Regulatory Development Authority

IRDA
IRDA was setup in 2000 as an autonomous body. The object was to regulate and develop the business of insurance and reinsurance in the country as per the Insurance Regulatory and Development Authority Act,1999. The main objective of setting up IRDA was to promote market efficiency and ensure consumer protection.

IRDA
IRDA is the controlling and regulatory apex body in the country for Insurance sector. Its Chairman and Members are appointed by Government of India. IRDAs HQ is located at Hyderabad.

IRDA
The Authority is a ten member team of I. A Chairman and every other whole-time member 5YRS (Maximum age is 60yrs) II. Five whole-time members (Maximum age is 62yrs) III. Four part-time members (not more than 5yrs) (all appointed by the Government of India)

Regulatory Framework
Insurance Companies Third party administrators Agents

Surveyors and loss assessors

IRDA

Insurance Advisory committee

Insurance brokers Insurance associations/ insurance councils Tariff Advisory committee

Insurance ombudsman

Duties & Responsibilities

According to the Section 14 of IRDA Act ,1999 there are certain duties: To regulate, promote and ensure orderly growth of the insurance business and reinsurance business. To issue a certificate of registration and powers to renew, modify, withdraw, suspend or cancel the registration.

Duties & Responsibilities

Protection of the interests of the policy holders. To specify qualifications, code of conduct and practical training for intermediaries. To specify the code of conduct for surveyors and loss assessors. Exercising such other powers as may be prescribed.

Duties & Responsibilities

To promote the efficiency in the conduct of insurance business. To promote and regulate the organizations connected with the insurance and reinsurance business. Levying fees and other charges for carrying out the purposes of this Act.

Duties & Responsibilities

To conduct enquiries and investigations for insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business To control and regulate the rates, advantages, terms and conditions that may be offered by insurers.

Duties & Responsibilities

To specify the form and manner in which books of account shall be maintained. To regulate the investment of funds by insurance companies. To regulate the maintenance of margin of solvency. Adjudication of disputes between insurers and intermediaries.

Duties & Responsibilities

Supervising the functioning of the Tariff Advisory Committee. To specify the percentage of premium income of the insurer to finance schemes. To specify the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector.

Removal from the office

1. The Central Government may remove from office any member who is act as an insolvent. has become physically or mentally incapable of acting as a member. has been convicted of any offence which, in the opinion of the Central Government, involves moral turpitude.

Removal
2. Has acquired such financial or other interest as is likely to affect prejudicially his functions as a member. 3. Has so abused his position as to render his continuation in office detrimental to the public interest. 4. No such member shall be removed under clause (d) or clause (e) of sub-section (1) unless he has been given a reasonable opportunity of being heard in the matter.

Functions of IRDA:
1. Ensure orderly growth of Insurance industry. 2. Protection of interest of policy holders. 3. Issue consumer protection guidelines to insurance companies. 4. Grant, modify, and suspend license for insurance companies. 5. Lay down procedure for accounting policies to be adopted by the Insurance companies.

Functions of IRDA:
6. Inspect and audit of Insurance companies and other related agencies. 7. Regulation of capital adequacy, solvency, and prudential requirements of Insurance business. 8. Regulation of product development and their pricing including free pricing of products.

Functions of IRDA:
9. Promote and regular self regulating organizations in the insurance industry. 10.Re-insurance limit monitoring. 11.Monitor investments. 12.Vetting of accounting standards, transparency requirements, in reporting. 13.Ensure the health of the industry by preventing sickness through appropriate action.

Functions of IRDA:
16.Publish information about the industry. 17.Prescribe qualification and training needs of agent. 18.Monitor the charges for various services by Insurance companies. 19.Regulating intermediaries like; Agents, Brokers ,Surveyors , TPA Health services, Web aggregators